Classification of UAE free zones based on the amount of investments required

Cost of company set-up is among the first questions we receive. Next comes a query, as to the most cost-effective option for set-up. In light of this, it is extremely important for us to walk you through various free zone options now and explain how the pricing changes from free zone to free zone. This will make you much more comfortable, when taking a final decision with respect to the area, where you want your future business to be located.



   How do entrepreneurs decide about those specific free zones that could beconsidered for set-up? There are so many of them in the UAE, that one can get easily lost in the months and years of research. Based on the years of relevant professional experience, we came to a conclusion, that the choice of a specific free zone is often a result of a recommendation by a business partner or a close friend. A friend of yours is highly speaking of Jebel Ali Free Zone, as he conducts trading business in the free zone and is happy with facilities, infrastructure and proximity to the port. Therefore, he recommends you the same set-up option for your service business. Secondly, often entrepreneurs associate the name of the free zone with the future company. For example, you are planning to do software development, therefore, Dubai Internet City free zone sounds very much in line with your business needs. However, as soon as you start researching free zones you have in mind, a new question arises: how to minimize costs on company registration, as you are a one-man-show start-up and you want to keep your costs at a minimum, at least in the first year. Here is where the hunt for the best price begins.


   Now that we will be comparing different free zones, we will be not looking at the cost of the license only. We will also look at other aspects, which may significantly affect the price of set-up. You will see, what it can be, shortly. But before we dive into the details, let’s first outline all those types of investments that cause the total to go up or down. These would be the following: registration fee, license fee, flexi-desk rental costs or ability to rent a flexi-desk in the free zone in general and share capital requirement.


   Registration fee. This is a one-time fee that you pay in the first year only. The same varies from free zone to free zone and can be as little as a couple of thousand dirhams or up to AED 9,000 or even AED 10,000 dirhams. Since you want to bring your annual operational costs down, it may be not helpful to focus on the one-off registration fee alone, as with relatively low registration charge you may get pretty much high license fee.


   License fee is also different across various free zones. The price range of the same is from AED 2,500 and it may go up even to AED 50,000, depending on the chosen activities.


   Flexi-desk rental price range is not that big as in the case with license fee. You will be able to avail from flexi-desk facility at a relatively same cost across all of the emirates and this can be approximately from AED 10,000 to AED 20,000 per annum. What is important to note, not all free zones in the UAE offer rent of a flexi-desk facility. Some allow rent in the first year only and it is mandatory to move to the standard office from the second year onwards. This is the requirement of Dubai Airport Free Zone. As such, you need to budget this in advance. There are other free zones, that do not provide flexi-desk facilities at all and you need to rent a commercial space. This is the case with Dubai Silicon Oasis and a number of other free zones.


   Some free zones provide a workstation with a quota for one visa, however, the cost of renting the same is high for a one-man-show start-up. For example, you can rent a workstation in Dubai Internet City and the cost of the same will be approximately AED 30,000 a year.


   Share capital is one more aspect all entrepreneurs are looking at. Since at the start the budget is relatively low, businessmen pay attention at those options, where physical depositing of share capital into company’s bank account can be avoided. Or, as an alternative, they look for the options, where requirement with respect to share capital is minimal. In Dubai most of the free zones require you to deposit a minimum of AED 50,000, that will be declared as a share capital of the company. However, there are also other free zones in Dubai, which allow to establish a company without immediate depositing of share capital funds and Dubai South (former DWC free zone) is one example.


   If you will start comparing set-up costs in free zones in the northern emirates, you will see that there is a wide range of options, which are quite competitive in terms of the investments required for set-up. By the way, free zones closely monitor the market and often introduce extremely positive amendments to further increase their competitiveness. Just have a closer look at Sharjah Media City free zone (SHAMS). As soon as the new free zone was established, it immediately attracted businessmen, as the costs of set-up at a certain point became the lowest in the market. After some time Umm Al Quwain Free Trade Zone decided to increase its competitiveness and introduced a new set-up package just for AED 13,500. To make this package even more attractive, UAQ FTZ included into the package following benefits: a quota for one visa and a flexi-desk agreement.


   In general, if you are on a low budget, you will be providing intellectual services and it will be just you working at the beginning, consider establishing a company in one of the northern emirates. However, if you feel pretty much established and ready to invest more, one of well-established Dubai Free zones can be preferred. There is no single recipe for everyone. Each single free zone in the UAE with no exceptions provides a certain number of benefits that can be interesting to you or someone else.


    If you want to know more about Dubai freezone company formation, feel free to get in touch with our professional consultant team and we would be delighted to assist you and help you to compare Dubai freezone company setup costs and help you to find that free zone, which would suit your business needs the most.


 Disclaimer: Business Boutique is not affiliated with any particular government or legal entity. Business Boutique does not give professional legal advice nor any other professional advice subject to a public office in the government. This article merely sets out a simple and basic idea as to the reasons of Dubai freezone company setup and Dubai free zone company formation cost. Business Boutique in no way holds nor imposes any official governmental or legal authority and the article herein is only to be taken as a guide. All further governmental or legal issues should be addressed to the corresponding authorities.

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